Beach Cities’ Free Ride on Trolley Nears End of Line : Transit Company Can’t Roll on Fares Alone, Owner to Seek Subsidies

Last spring, David Shumway made an unusual proposal to city officials in Redondo Beach and Santa Monica: Issue his American Trolley Lines a business license, and the Arizona-based company would operate a shuttle bus system in each city without public subsidies.

Shumway, who hoped agreements with the two popular beach cities would open the door to the Southern California market, told city officials that he could operate the bus lines at a profit--with revenues coming from fares, charter fees and advertising.

“This is a dream come true,” Redondo Beach City Manager Timothy Casey said at the time. “Transit systems are notorious money-losers. If the private sector wants to assume the responsibility, we should let them.”

But eight months and hundreds of thousands of dollars later, the private sector is having second thoughts. In fact, Shumway said in an interview this week, the free ride for Redondo Beach and Santa Monica will soon be over.

‘Looking for Subsidies’

“I won’t stand around and lose money very long,” said Shumway, who has been operating two buses, designed to resemble turn-of-the-century trolleys, in each of the cities since the summer. “We are going to start looking for subsidies from cities. If we don’t get them, then we won’t operate in that city.”

While Shumway declined to disclose how much money American Trolley has lost in Redondo Beach and Santa Monica, losses have been serious enough during the first six months of operation to force the company to reevaluate its strategy in Southern California, he said.

“I told the cities that I would do it on my own, but unfortunately we haven’t been able to do that,” Shumway said. “It has been a good experience, but, quite candidly, the costs have exceeded our revenues.”

Much of the problem has been the so-called “California factor,” Shumway said. Costs are higher in California than in Arizona--registering a bus for example, costs 40% more, he said--and the service is spread out over a year, rather than six months, as it is in winter-resort towns in Arizona. American Trolley operations in Phoenix and Mesa operate in the winter months only, and they are not subsidized, Shumway said.

Not Enough Income

Fares, advertising and charter fees simply have not been brisk enough to make up for the higher regional costs of operating in Southern California, he said. Riders pay 50 cents for a one-way ticket, advertisers pay $3,370 for an average ad on the outside of a bus for six months, and groups pay $50 an hour to charter a bus after hours.

The first sign of American Trolley’s new strategy in Southern California surfaced last month in Manhattan Beach, where city officials were able to reach agreement with the company for trackless trolley service only after consenting to a $2,000 monthly subsidy.

The company initially asked for a $6,000 monthly subsidy, Manhattan Beach officials said, but when city officials balked, the length of the proposed bus route and the amount of the subsidy were pared down.

A similar drive for subsidies is under way in Santa Monica, where city officials are mulling over a proposal from Shumway that calls for payments from the city beginning next month. Ray Davis, city parking and traffic engineer, said the request did not come as a surprise to skeptics at City Hall.

“There were people who were skeptical at the beginning--the ‘I-told-you-so types,’ ” Davis said. “As for the staff, it is now obvious that a private venture isn’t going to make it on its own.”

Free Service

Davis said Santa Monica city officials have not decided what they will recommend to the City Council, which must approve any subsidy, but he indicated he favors a plan that would eliminate the 50-cent fare. Under that plan, the trolley would be free and the city would use county transit-tax money to subsidize the service. He estimated the subsidy could cost the city as much as $100,000 a year.

“We haven’t been getting the ridership that we had hoped for,” Davis said. “If we made it free, I think that would make the difference.” Under such a plan, Davis said, the buses will serve as a shuttle service in the city’s business district, helping to alleviate congestion and severe parking problems that are common to beach cities on the Westside and in the South Bay.

Shumway acknowledged that the number of riders in Santa Monica is well below projections, averaging between 100 and 200 trips a day. In comparison, Redondo Beach, a city with 30,000 fewer residents, has attracted twice as many riders, he said.

But even with more riders in Redondo Beach, Shumway said he may ask officials in that city to come up with a subsidy as early as next month. The Redondo Beach City Council issued American Trolley a six-month business license that comes up for review at the end of this month. Shumway said he will decide in the next two weeks whether to request the subsidy when that license expires or to wait until next June.

Inadequate Promotion

Redondo Beach City Manager Casey attributed some of the trackless trolley’s shortcomings in his city to inadequate promotion by American Trolley, a complaint that Davis said is also common in Santa Monica. Casey said the buses began running just six weeks after Shumway first approached the City Council. Casey noted that the company has still not submitted trolley stop signs to the city for approval.

Even so, Casey said, he and his staff were “somewhat disbelieving” last spring when Shumway suggested he could survive in Redondo Beach on revenues from fares, charter fees and advertising. Casey said Shumway recently told him that the firm cannot operate much longer in the city without a subsidy. Shumway said he has not yet decided how much money he will request from Redondo Beach. Casey said the city would prefer that Shumway wait until June before asking for a subsidy to see if posting signs along the route results in increasing the number of passengers.

Despite American Trolley’s difficulties in Santa Monica and Redondo Beach, Shumway said officials in other cities are lining up for trackless trolleys--even with the required subsidies. American Trolley is in contract discussions, he said, with about a half dozen cities in Southern California--including Newport Beach, Redlands and La Mesa.

Shumway said cities are attracted to the “fun” form of transportation, which includes a costumed driver who clangs a brass bell at stops and intersections. In beach cities where tourism is important to the local economy, the trackless trolleys also serve as an unusual promotional tool, he said.

“It is quite a service to the community for a small cost,” explained Manhattan Beach City Manager David J. Thompson, who helped bring the trackless trolleys to his city. “We are anxious to get our citizens out of their cars and into buses.”

$24,000 a ‘Bargain’

Thompson said that even with a $24,000 annual subsidy, a trackless-trolley service in Manhattan Beach is a bargain. In nearby Lawndale, for example, the city pays $185,000 a year for two trolleys from Pacific Busing Lines--although rides are free in Lawndale and will cost 50 cents in Manhattan Beach when service begins in March.

By subsidizing the bus service, Thompson said, the city can also play a larger role in regulation and promotion. The Manhattan Beach contract, for example, calls for the city to provide banners that will hang over major streets, promote the trolley in the city’s newsletter, and install the trolley stop signs. In return, the city will have greater say in determining the trolley’s route and schedule and in analyzing passenger data.

Davis of Santa Monica said a subsidy from that city would also require greater city participation in the operation and management of the line. One proposal, he said, calls for the creation of an advisory committee composed of local business, tourism and city representatives that would oversee operations.

“If we start investing in a private business to ensure financial stability, then we have a right to become more involved,” Davis said. “Right now we haven’t felt we could do that because it is a private business.”

Shumway said he regrets that his earlier promises of taxpayer-free transit systems in Southern California won’t come by way of American Trolley Lines, but he offered no apologies. “I don’t think we reneged on anything,” he said. “They gave us a six-month trial period. We tried it and found out we could use some assistance from the cities.”